COLLOQUY Research Shows 20% Decline in Word-of-Mouth Opinion Sharing about Companies and Products since 2008

Shrinking Budgets Turn Consumer Extroverts into Shrinking Violets

CINCINNATI--(BUSINESS WIRE)--Despite an explosion in consumer conversation technology, Americans have cut back substantially since 2008 on the opinions they share by word-of-mouth (WOM) about companies and their offerings, COLLOQUY research shows.

Of 3,295 U.S. consumers surveyed by COLLOQUY, 58% said they often have conversations with family, friends and coworkers about products and services they’ve used. That’s down from 73% when COLLOQUY posed the same question in a 2008, a 20% drop off.

Additionally, 57% of respondents in the latest survey said they often recommend products and services to others, compared to 75% in 2008, a 24% decline, according to the research from COLLOQUY, a LoyaltyOne company that provides loyalty marketing publishing, education and research.

The reduction in WOM activity can’t be attributed to a shortage of ways for WOM views to spread. There are face-to-face conversations, landlines, cell phones, email, instant messaging, texting, blogs, micro-blogs like Twitter, review sites like Trip Advisor, and of course, Facebook. COLLOQUY believes the economic downturn is to blame and explored the notion by taking a close look at respondents holding favorable and unfavorable outlooks compared to the previous year.

Instead it seems the tough economy over the last two years may be the culprit responsible for the dampened willingness to engage in brand WOM. For example, of respondents who reported their households are doing better economically this year than last, 71% said they often have conversations with others about the products and services they use. That’s very similar to what COLLOQUY found two years ago, before the recession became “the meltdown.” Yet, among those who now see themselves as worse off, just 56% reported having brand conversations and 55% said they make product recommendations.

Looking to the future, 74% of respondents who see their own financial outlook brightening said they have conversations about products and services, versus 55% for those who see their financial outlook worsening. And 67% of those who see a brighter future said they make recommendations, compared to 55% for those who see their finances tightening.

These findings suggest that worries about current employment and future prospects have crowded out discussions about brands among a significant portion of the consumer population.

“Consumers on shrinking budgets don’t seem to be in the mood to talk about the hottest new restaurant, the brightest plasma screen, or the best airline. Or, if they are in the mood to talk, they may be sensitive to the possibility that others in more dire straits are in no mood to listen,” said COLLOQUY Partner Jim Sullivan.

COLLOQUY’s WOM survey, featuring completed responses from 3,295 U.S. consumers nationwide, was conducted in December 2010. COLLOQUY has published a white paper titled Urban Legends: Word-of-Mouth Myths, Madvocates and Champions – Debunking Myths About Brand Conversations and Word-of-Mouth in Social Media. The paper presents the complete results of the latest WOM research. It’s available free of charge at www.colloquy.com/whitepapers.

COLLOQUY previously previewed select findings from its latest WOM research in a press release highlighting results showing that more than one out of every four consumers (26%) said they are far more likely to spread the word about a bad experience with a product or service than a good one. Among consumers who are highly likely to recommend their favored brands to others and also have a large network of frequently contacted friends and family – a group COLLOQUY calls WOM Champions – 31% said they are far more likely to share information about a bad experience. COLLOQUY experts adopted a little known term, “Madvocates,” as an apt name for consumers predisposed to engage in negative WOM practices.

In other new results from COLLOQUY’s latest WOM survey:

• 33% of consumers fit the definition of WOM Champions
• 9 out of 10 WOM Champions belong to one or more loyalty marketing programs
• WOM Champions account for 39% of memberships in loyalty marketing programs
• Loyalty marketing program members are three times more likely to be WOM champions than consumers who don’t belong to loyalty programs.

“COLLOQUY’s 2011 WOM study doesn’t reveal a magic bullet to help companies engage with consumers but it does suggest tactics that loyalty marketers searching for truth in a growing sea of urban legends can execute within their social media and Word-of-Mouth strategies,” said COLLOQUY Managing Partner Kelly Hlavinka. She offered the following tips:

1. Make sure customers not only have an opportunity for a dialogue (not a monologue) with the brand, but with each other. That’s what COLLOQUY calls the ‘trialogue.’ Get the conversations started by asking for opinions and insights, and recognize contributions.
2. Involve customers in WOM programs by forming online social sharing communities, panels and co-development platforms. Do your own social media.
3. Be innovative and make sure content is relevant, fresh and rewarding. Start by transforming your marketing mindset from “incentive” to “service.” Be sure to nip any service problems in the bud and head off any negative WOM that can quickly go viral from these well-connected customers.

About COLLOQUY:
COLLOQUY® comprises a collection of publishing, education and research resources devoted to the global loyalty-marketing industry. Owned by LoyaltyOne, COLLOQUY has served the loyalty-marketing industry since 1990 with over 40,000 global subscribers to its magazine and www.colloquy.com the most comprehensive loyalty web site in the world. COLLOQUY’s research division develops research studies and white papers including industry-specific reports, sizing studies and insights into the drivers of consumer behavior. COLLOQUY also provides educational services through workshops, webinars and speeches at events throughout the world and is a loyalty-marketing partner of both the Direct Marketing Association and the Canadian Marketing Association and a content provider to the American Marketing Association. COLLOQUY also operates the COLLOQUY Network, a global consortium of practitioners certified in COLLOQUY’s proprietary methodology. COLLOQUY magazine subscriptions are available at no cost to qualified persons at www.colloquy.com or by calling 513-248-9184.